INDIAN RAILWAY FINANCE CORP (NSE: IRFC) Q4 2025 Earnings Call dated Apr. 29, 2025
Corporate Participants:
Manoj Kumar Dubey — Chairman and Managing Director and Chief Executive Officer
Shelly Verma — Director, Finance
Analysts:
Parth Jariwala — Analyst
Mohit Jain — Analyst
Abhishek Law — Analyst
Kamal Mulchandani — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Indian Railway Finance Corporation Q4, FY25, and Full-Year FY25 Earnings Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] I now hand the conference over to Mr. Parth Jariwala from DAM Capital Advisors Limited. Thank you. And over to you, sir.
Parth Jariwala — Analyst
Thank you. Good morning, everyone. Welcome to the Q4, FY25, and FY25 Earnings Call of Indian Railway Finance Corporation Limited. From the management, we have Shri Manoj Kumar Dubey, Chairman, Managing Director, and CEO; Ms. Shelly Verma, Director, Finance; Shri Sunil Kumar Goel, GGM Finance and CFO. I will now hand over the call to the management for their opening remarks. Post which, we can open the floor for Q&A. Over to you, sir.
Manoj Kumar Dubey — Chairman and Managing Director and Chief Executive Officer
Thank you, Mr. Jariwala and very good morning to all of you. I’m very happy to share our Q4 and annual results of FY25. We have come out with a very steady number quarter-wise as well as financial year-wise. Our profit after tax, our networks, our EPS, our debt-equity ratio all have shown steady improvements. Our assets under management is also very steady at INR4.6 lakh crores.
The exciting thing to talk about is in the last quarter of FY25, we have changed our business model from one client, that is Indian Railway, to many who are having linkages with railway ecosystem. This is an extremely exciting phase, and our key drivers are very low-cost overhead and access to cheaper source of funds. We are looking for good-quality A-plus assets at our space, where we do not find much competition as of now. And these are the space where we are looking forward to having a negligible chance of NPA. We are becoming lowest in bids, beating all banks and NBFCs and still making margins of 2x to 3x to what we used to get from Indian Railways. So going forward, we find our platter full with such good quality rated assets.
We don’t have any exposure to any other entity other than IR. So there’s no problem in funding to any quality assets coming to our platter mainly through RFPs or open biddings. We are also very excited to look at the PPP projects in Indian Railways. If you look at the budget of this FY, there is announcement that there will be PPP projects coming forward from the railways, and once it materializes, we will be very happy to look at the requirements by the SPVs. In this calendar year, including the month of April, we have already done more than INR14,000 crores of loans. And going forward, there are many things in pipelines which are having refinancing opportunities as well as new loan assets.
We believe that IRFC 2.0 is going to have risk-free and steep growth in business. The company was conferred Navratna status also in FY24, FY25 and we are working forward cementing our position to be just Maharatna sooner than later. We also expect that the kind of business that we have shown in the last quarter of the last FY, in the first month of this current FY, the momentum is going to be there, and we should end up on a very high note. Thank you.
Questions and Answers:
Operator
Thank you, sir. We will now begin with the question and answer session. [Operator Instructions] The first question comes from the line of Mohit Jain from Tara Capital Partners. Please go ahead.
Mohit Jain
Hello, can you hear me, sir?
Manoj Kumar Dubey
Yes, yes, Mohit. Please go ahead.
Mohit Jain
Good morning, sir. I just wanted to know for FY26, how should we look at our disbursement number, as well as how should we look at the AUM [Phonetic] growth? And secondly, sir, I heard that now we’ll be moving from one customer today. It used to be only IRFC and now — Indian Railways and now we are moving to the other set of customers also.
So do our articles and memorandums permit us to go into non-rail-linked financing also, as in like, if you want to do other kind of financing, which is not linked to the rail? Is that also — is that option also available to us, sir?
Manoj Kumar Dubey
So right now, I’m answering your latter part of the question. We are only limiting ourselves to the MOA, which gives me the legroom for giving loans to anything which is having backward or forward linkages to the railways. Now this particular segment itself is too big to handle right now. As I mentioned in my interview on the TV also today in the morning, the whole business is around INR2.5 lakh crores, including the metro railway.
So you can understand what kind of business is there on the platter. And since that is our core competence and strength to give loans and do appraisal of the railway ecosystem. We believe that as of now, out of this INR2.5 lakh crore, you can put any number what we could do in a year. So this is itself quite a big platter. And this is coming with better margins than what I used to get from the railways.
So that is a real exciting time for us, that if we do, say, typically even INR30,000 crores out of INR2.5 lakh crores, it will be akin to INR90,000 crores of what I’m giving to the Indian railways. So this is the answer of your latter part.
The first part, in the morning, I’ve already clarified that my board has given me the initial sanction of INR60,000 crores of disbursement or loan sanction for this year. And that is a very conservative number that we have started. In the first four months of this FY or if you take only this month, April, we have already done INR5,000 crores loan L1 with NTPC. And since we are participating into all rated quality bids coming out in the market, which is coming low. In fact, many are in pipeline also. So we believe that with the linkages with the railway itself, we have our platter full. And the numbers that I quoted is a conservative number.
We believe that we surely will be achieving it. Maybe the clarity will come in Q2 or Q3 whether we are going to surpass and if at all we are going to surpass with what margins and what numbers we are going to surpass. But quarter after quarter, as I have spoken in my two last con calls, we are walking the talk what we set for ourselves in Q3 results, we have already crossed many bridges and we are moving ahead quicker than what we expected to do. Thank you.
Mohit Jain
Do we — just a follow-up. Sir, do we expect our AUM increase next year or again because of the rundown of the existing loan? In spite of the additional disbursement, our AUM will decline.
Manoj Kumar Dubey
Listen, the bigger indicator is what kind of disbursement I’m doing, what kind of loan sanctions I’m doing. AUM is a collective output of the both. So of course, if I’m disbursing more, it will have a positive impact on my AUM. AUM is not the important indicator in my business. The important indicator in my business is how much I’m disbursing and how much I’m sanctioning. If I’m doing both, obviously, it will have a very positive impact on the AUM. I will be giving you numbers of disbursement and the loan sanctions.
Mohit Jain
Understood. And just sir, just one follow-up. In terms of — we bidding for the other projects and so far, we have been successful also in winning them. Cost of the — the cheap cost of funds, and because of which the rate which we are able to quote is the lowest that gives us the advantage? Or is there any other advantage that we also have?
Manoj Kumar Dubey
Say it again.
Mohit Jain
I’m saying, sir, so far, we have also won four projects and going forward also, you look more optimistic with INR30,000 crores of a conservative disbursement number. So what enables us in all this winning of the project? Is it just the cheap rate of lending that we quote because of our access to the cheaper fund? Is that the only…
Manoj Kumar Dubey
Let the DF answer this to you.
Shelly Verma
We have a competitive advantage on many accounts. Rate is definitely one of them and because we have a very low operating cost. You must have seen our operating cost is one of the lowest in the industry, about 0.1. We don’t have — 0.1%, even less than 0.1% and we have very high capital adequacy ratio. And secondly, we have — our exposure is absolutely free because till now, we had a single client. So whatever new business we want to do, we have the advantage of doing a high-ticket exposure; whatever is the requirement, we can meet. So all these are the advantages. So it’s not a one-factor. I would say there are multiple factors. We can take high-ticket exposure. Our ost definitely would be competitive because of these reasons. And we have a very strong turnaround, very quick turnaround of time. In fact, you have seen the last quarter itself, we have generated business of INR14,000 crores. So these are the — there are multiple advantages according to us.
Mohit Jain
Okay. And just one — rates at which we are giving these loans, the INR14,000 crores, what is the average rate at which we have lent it — we have given the disbursements?
Manoj Kumar Dubey
So Mohit, rate, we don’t disclose. But if I make a statement that I’m L1 in a competition where all the banks of the country and all NBFCs are coming, so you can put the number — by what number we are beating any of the banks and any who is who of NBFCs.
Mohit Jain
Understood. Okay. Okay. Thanks a lot for answering the question. Thank you.
Operator
Thank you. [Operator Instructions] The next question comes from the line of Abhishek Law from Business Language. Please go ahead. Abhishek, please go ahead with your question and unmute yourself in case if you’re on mute. Abhishek, please go ahead with your question.
Abhishek Law
Is it possible to go ahead? Sir, this is Abhishek. Is it possible to go ahead with the refinancing bid or how much you are refinancing? What sort of numbers are you looking at and which are these projects that you would refinance?
Manoj Kumar Dubey
Abhishek, you asked us a very interesting question for us. Refinancing is — we are looking forward to very excitedly for the fact that the moment I win a bid for refinancing, the disbursement is done instantly. So yes, there are many things in pipelines. I can’t tell you the name of the project or something but it is very much on my platter. Many things are in pipelines. And because our cost of lending is cheapest than anyone else’s right now in the country, we still believe that by refinancing the projects, we’ll be earning much more than what we are earning from the Indian Railway as a margin. So yes, it is there on the platter.
Operator
Does that answer your question, Abhishek?
Abhishek Law
Yeah. I have a follow-up question. If it’s possible. Have you done any refinancing projects as of now in Q4?
Manoj Kumar Dubey
Pardon?
Abhishek Law
Have you done any refinancing projects in Q4?
Manoj Kumar Dubey
Not yet. Not yet. As I said, there are few in pipelines very actively. But unless it is mutually agreed and unless we have informed the exchanges, we are not going to discuss here.
Abhishek Law
Okay, that helps. Thank you.
Operator
Thank you. [Operator Instructions] The next question comes from the line of Kamal Mulchandani from Investec Capital Services. Please go ahead.
Kamal Mulchandani
Hi, sir. Thank you for the opportunity. Firstly, could you please quantify cumulative amount of sanctions we have got till date apart from the funding to Indian Railways?
Manoj Kumar Dubey
You want to know in totality or in this FY or in last FY?
Kamal Mulchandani
Like I believe from the last year we are trying to take projects outside of the Indian Railway. So cumulative from the last year till date?
Manoj Kumar Dubey
I got it. So let’s understand the whole gamut. For the last 40 years we had only a single client business that is the Indian Railways. So only as late as Q3 of last FY we decided that this is the time to diversify, as the loan books with Indian Railways is very high and debt equity ratio also we’re touching near to 10. So as a diversification decision within the mandate of this company’s MOA, we planned in Q3 and started working actively from Q4. So, Q4 to now, the numbers we have already flagged. In fact, it is flagged by the government of India also that we have already mopped up INR14,000 crore as of now. So the answer to your question in factual numbers are INR14,000 crores has already been either won as a bid or the sanction has been done.
Kamal Mulchandani
And like disbursement, when can we expect some disbursement of this amount?
Manoj Kumar Dubey
In fact, to tell you a fact, the NTPC renew that we did and the BOBR rate that we did already very quick and fast disbursement is on. So what we expect that although there are 2-year period for this disbursement, we expect that most of the disbursement will be done in this FY itself.
Kamal Mulchandani
Okay. Understood. And sir, if you could also help us understand what could be the rundown or repayments of the — in the AUM going forward? Like, I just wanted to understand what repayment rate should be built in for next 2 years for FY26 and FY27?
Manoj Kumar Dubey
Repayment in terms of?
Unidentified Participant
Rundown of the AUM.
Manoj Kumar Dubey
The rundown of AUM is very steady. If you know, we have financed to the Indian Railways where it is — repayment period is 15 years. Okay. So the 15th year, to be precise, if it is 2025, then 2010 loan will come out to be — going out of my books, which is in terms of INR10,000 crore per annum.
Kamal Mulchandani
Okay. So roughly 10,000 to 20…
Manoj Kumar Dubey
[Speech Overlap] every year.
Kamal Mulchandani
Okay. So for the next two years, roughly INR10,000 crore of repayments, we should build it.
Manoj Kumar Dubey
That’s what. That’s correct.
Kamal Mulchandani
Okay. Okay. Got it. That’s all from my side. Thank you so much.
Operator
Thank you. [Operator Instructions] Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management for the closing comments.
Manoj Kumar Dubey
Thank you so much. We are moving ahead with a lot of clarity and I think we have clarified everything about the roadmap of the company’s business going ahead. And we look forward to capitalizing on what we are doing as a new policy of diversification. And we see that going forward, we will be having very healthy top-line and bottom-line quarter after quarter. Thank you.
Operator
[Operator Closing Remarks]